Key points:

  • US job openings fell to 7.2 million in July from 7.4 million in June, according to the US Bureau of Labor Statistics, lower than anticipated.
  • The quits rate stood at 2%, continuing a sluggish trend.
  • Total layoffs were flat at 1.8 million, and the layoff rate remained at 1.1%, as companies continue to hold on to their workers.

Today’s JOLTS data offers a good reminder of why labor market churn matters: It can help drive up wages, create more opportunities for a broader range of workers to enter the market, and support innovation. For the past few months, the opposite has largely held true.

It’s often said that quitters never prosper, but in the job market, that’s typically not the case — quitting a job for a better opportunity has historically been the best way to boost wages. But in today’s low churn environment, these things aren’t happening to the extent they otherwise might. Fewer job openings means slower wage growth for job switchers, limited opportunities, and potentially slower innovation. For the first time in years, wage growth for job stayers is higher than it is for job switchers, in part because employers don’t need to compete as hard to fill open positions. The quits rate — which measures voluntary separations — has been flat at 2%, continuing a trend of stagnation. Staying in your current job doesn’t typically result in large wage increases, and the limited number of available openings, combined with broad consumer anxiety, may encourage more workers to hunker down instead of look out and ahead, potentially stifling some market dynamism. 

The fact that wages are growing more slowly for job switchers suggests that those who are moving jobs may be doing so involuntarily and are generally not moving to better-paying roles — and those who are moving voluntarily are likely not doing so in large enough numbers to meaningfully change the dynamic. Job seekers have definitively lost the negotiating leverage they enjoyed in the immediate post-pandemic period as the market has cooled. And with inflation still looming large, many workers’ paychecks might not be able to keep pace with rising costs.